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Tag: Anna Maria Island real estate

Castles in the Sand

Is Anna Maria Island still Old Florida?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

There’s no doubt how much Anna Maria Island has changed over the past 25 years since I found the Island. One might say it’s gone from shabby chic to polished coastal, but has it also gone from Old Florida to upscale Florida pretending to be Old Florida.

Last month the Island, or at least Holmes Beach, had another “best of” rankings bestowed on them. This time it was from Trip Advisor who picked the top seven “delightfully low-key Florida beach towns you might not know about.” Well if they didn’t know about it before they sure know about it now. Just what we need, more cars on the Island. On the other hand, for people who own property on the Island and want to generate some profit, this may be the right time if you follow a few simple rules.

There are lots of ways to get your property out there if you’re considering rentals, VRBO, Airbnb, the new Marriott Homes & Villas and of course, traditional Island real estate companies.

Starting with a great location is key and the Island has a multitude of great locations. Properties closer to the beach always rent for more but it’s hard to find anywhere on Anna Maria Island that’s undesirable.

Next is the number of bedrooms, the more the better. If there is any way to turn available space like an office or storage room into another bedroom it will make your rental more attractive. Also, remember the children and furnish the property with sturdy and well-built trendy furniture that is washable and somewhat indestructible. Leave the Chippendale in storage.

Provide big sectional sofas and seating areas for everyone to get cozy on, and also a large enough dining table for the maximum number of guests allowed. Add some beach essentials like beach chairs, beach toys, beach carts and maybe even paddleboards. If you have a pool having a floating chair with a drink holder could seal the deal. A gas grill is also appreciated by renters as are ping pong tables, bikes, games and restaurant recommendations. Towels, including beach and bedding that are not expensive but in good condition, are essential. No one likes a dingy towel. Don’t forget toilet paper, paper towels, bath soap and dishwasher soap, providing at least enough to get started if it’s a long-term rental and enough to get short-term renters through to the end.

Leaving a complimentary bottle of wine and some welcome cheese and crackers is a nice touch that people don’t forget. And don’t be afraid to decorate with some cute and beachy stuff. I read somewhere it’s a good idea to have a plaque made with the name of your rental placed in a position where renters might take a picture, free advertising when they show their vacation photos to friends.

The bottom line is to create a space that you would like to spend time in.

Trip Advisor loves the slower pace of Holmes Beach and the “Old Florida” vibe without the crowds. But we’re not alone – the other top six low-key Florida destinations include Venice, Cocoa Beach, Englewood, Daytona Beach Shores, Lauderdale By The Sea and Longboat Key. I’m not sure if Longboat Key residents would agree with the “Old Florida” characterization, but polished coastal does fit.

There’s no argument that Anna Maria Island is one of the most beautiful beachfront communities in the country and to people coming here for the first time it still epitomizes Old Florida. So, if you’re considering using your home as a rental there certainly is a thriving market. Old or upscale, it’s still the tops.

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The Grinch that stole your real estate deal

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

If you’re in a home negotiation, whether you’re the buyer or seller you better watch out for the home inspection grinch. To the buyer, the grinch is a kindly and informed fellow who will uncover all of the home’s secrets and to the seller, the grinch is a nosey picky guy who when he uncovers all of your home’s secrets will tell the buyer. Whichever grinch you see he is a necessary evil to the purchase transaction.
Home inspections have become standard operating procedure for both single-family homes and condos all over the country. Generally, a seller is entitled to a home inspection within a specified number of days after both parties have signed the purchase of sale agreement and/or contract of sale. The number of days is determined by the culture of the region and the availability of inspectors in that region.
Inspectors are looking for defects in major systems like electrical, plumbing and heating and air conditioning. In Florida in particular, inspectors are very sensitive to mold and mildew and may use a moisture meter looking for damp areas behind walls from a plumbing leak. They will also check for water pressure in toilets, tubs and dishwashers, as well as the condition of appliances and outdated wiring.
If an inspection comes back with legitimate problems, the buyer and seller should come to an agreement and time frame for repairs. If they fail to do so, the contract is voided, the buyer gets their earnest money back and everyone walks away.
Some buyers will waive the contingency of inspection in an effort to make their offer more appealing, however, they may still have an inspection. This means that in theory if an inspector finds a problem the buyer cannot walk away from the contract and will forfeit their earnest money. But, as we all know, anything can be litigated, tying the house up in court while the buyer tries to get his money back or renegotiates a new price. The point is, be careful with a buyer who removes the inspection contingency as a strategy.
As a seller, there are a couple of ways to keep the real estate grinch away from your door. One is to have your own home inspection prior to putting your home on the market. This will give you a heads up on any problems you may not know about or may not think are serious. An inspection is also a useful tool to provide your broker with to pass on to potential buyers along with other disclosure documents. Buyers will likely still want their own inspection, but it will give them a nice warm feeling about the home and you as a seller.
Another positive to present to buyers is a gift of a home warranty that covers certain repairs to appliances, plumbing, electrical systems and heating and air conditioning units. Warranties are typically for a year and will cost about $700 for the average single-family home. According to the National Association of Realtors, only 17% of all sellers offer a home warranty as an incentive to potential buyers. Again, buyers will get a nice warm feeling about the transaction and it will also make your home stand out among others. Home warranties included in the sale should not, however, remove the home inspection from the buyer’s list of due diligence items.
Even though the inventory of homes is way down, sellers should still attempt to provide quality disclosure about their property and remedy serious issues. It’s the ethical thing to do and it’s the best way to keep the Grinch from stealing your real estate transaction.

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Today’s challenge for buyers

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

There’s a big predicament out there all over the country for home buyers, especially first-time buyers. There’s nothing to buy and, apparently, it’s my generation’s fault.

United States homeowners are staying in their homes much longer than ever. Nationwide, homeowners are remaining in their homes typically 13 years, which is five years longer than they did in 2010, according to Redfin. This fact is keeping the housing inventory low resulting in low sales statistics month after month. Except for the early part of this year, the inventory of homes for sale is now near the lowest level in 37 years of record-keeping, according to the housing data firm CoreLogic, Inc.

You don’t have to be an economist and expert in the housing market to understand that when owners don’t trade up to a larger home for a growing family or downsize when children leave it there are availability consequences. When this happens, which is rapidly becoming a fact, it puts a cap on the number of homes available for buyers either looking to upgrade or just coming into the market.

The baby boomer generation, who are now entering their seventies, is partly to blame for the lack of inventory since many of them are staying healthier later in life, are more active and don’t see any reason to downsize. Some states make it easier for seniors to stay in their homes with generous tax benefits. In most states, once you move you lose that benefit which only encourages senior homeowners to stay put.

In Manatee County, however, there is a program for homesteaded residents that allows homeowners to move to a new home and retain some of the tax benefits of the original home. This is called portability and it gives you the ability to transfer the “Save Our Homes” cap to a new home. The “Save Our Homes” cap is the difference between your market value and assessed value. For example, if the just value of your new homestead property is more than the just value of your old homestead, you will be able to transfer your cap up to the $500,000 limit. This went into effect on January 1, 2008, and allows you two years to make the application for portability. In addition, there is no limit on the number of times you move and apply for portability.

October sales statists from the Realtor Association of Sarasota and Manatee is showing a similar trend in inventory. Here are the numbers.

Both Manatee and Sarasota counties continue the upward drift in sales prices with Manatee doing a little better. The number of closed single-family homes in Manatee County increased by 5% compared to last October. The median sale price for single-family is $325,000, up 9.1% from last year and the average is $396,342, up 7.4%. Sarasota’s single-family median sale prices increased by 5.6% to $285,000 and their average sales price increased by 12.5% to $385,131.

Condos in Manatee County closed 0.5% fewer sales, however, the median sale price increased 0.9% from last October to $192,999 and the average sale price increased 20.2% to $262,724. Sarasota’s condo median sale price decreased 5.7% to $220,352 and their average also decreased by 0.9% to $297,501.

Inventory of available properties continued to drop in Manatee County to a 3.4 months supply for single-family homes and 3.7% for condos, putting additional pressure on the market. Who knows what the inventory future holds and the effect it will have on the upcoming selling season? In the meantime, buyers are just waiting and waiting and blaming their parents and grandparents. Happy Thanksgiving!

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Castles in the Sand

Are condos the future of housing?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

In case you haven’t noticed, interest rates are low, real low. Most rates for a 30-year fixed-rate mortgage are hovering around 4% based on credit scores and income to loan ratios. In spite of this, condo financing has always been somewhat of a poor stepchild to single-family home financing. New condo construction loans have been especially vulnerable to government regulations, but now The Federal Housing Administration has issued some new guidelines making available more advantageous condo financing programs.

FHA is trying to be more responsive to market conditions as well as accepting that condo units are being viewed more broadly as a way to provide affordable housing in many markets. Generally, single-family homes may not be accessible for first-time buyers and others who are trying to gain access to homeownership and condos nicely fill that need.

The new regulations are geared for new condo construction primarily but will also have an effect on the availability of condos for first-time buyers. Among other changes is one that has been a big issue for condo builders and that’s the owner-occupancy rate. The new FHA regulations have lowered the number of owner-occupancy rates as low as 35% from 50% before individuals can qualify for financing in new condo construction.

Condos are a big deal in Florida and in Manatee County. Although the number of condo sales was down in September for Manatee County, the sale prices were up, so let’s take a look at the county overall:

In September Manatee County closed 15.2% more single-family homes than last September. The median selling price for single-family was $315,000, 6.8% higher than last September. The average sale price was $381,577, 9.6% higher than last year.

Condo sales in September were down 8.6%, but the median sale price was up 6.7% to $199,000 and the average sale price was also up by 16.1% to $244,587. Both single-family and condos are low in inventory with the single-family home months supply at 3.3 months and condo months supply at 3.8 months. As a reminder, 5.5 months supply is the benchmark for a balanced market.

Sarasota County is also showing some increases in sales and pricing for single-family and condos. The median sale price for single-family in Sarasota increased by 6.4% to $298,000 and for condos, the median price decreased slightly by 1.8% to $232,000.

Statewide single-family homes reached a median of $265,000, an increase of 5.3%, and an average of $339,862, an increase of 4.9%. Condos statewide also increased with the median selling price at $193,000, a 5.8% increase, and an average of $261,532, a 1.3% increase.

All county and statewide statistics are from the Realtor Association of Sarasota and Manatee website.

Evidence continues to mount that condo sales will play a more significant role in the mortgage origination market in the next few years, according to CoreLogic. With a flood of millennials and other first-time homebuyers expected to soon enter the market for affordable housing, CoreLogic foresees a rising demand for condos in the near future.

Millennials aside, Florida is a hot market not only for retirees but homeowners relocating to a tax-friendly state with a lot of new construction and fundamentally great weather. But if you’re starting to think of relocating to the Sunshine State, you better get moving. Inventory is low, prices are high and interest rates are still historically low. Come on down!

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The ghosts of real estate

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I never really believed in ghosts and evil spirits. It was always fun to talk about other people’s experiences at parties but since I never had any first-hand knowledge it was just that, fun until it wasn’t.

Anna Maria Island has its share of ghost sightings including haunted restaurants, even one with a ghost cat. Hotels have had sightings – how about a bride ghost – and, of course, Coquina Beach has its resident ghost. Naturally, some clever entrepreneurs have packaged these events into entertaining tours around the Island, so you can get up close and personal. But if you’re selling your property and you think you may have a ghost, what do you do?

Thankfully, Florida absolves property owners of the responsibility of disclosing paranormal activity in homes or the fact that a crime was committed in a home. In addition, the seller does not even have to disclose that their property was suspected to be the site of a crime. Further, a seller has no obligation to disclose homicides, suicides or deaths that occurred on the property. Basically, you can sell your property with all the ghosts, ghouls and goblins as an added bonus.

Florida is one of more than 20 states with laws that say agents and sellers won’t be held liable for failing to mention that 20 years earlier a wife stabbed her husband in the home’s master bedroom, for instance, or the possibility of paranormal activity. Our state does not consider these events material facts and therefore property owners are not subject to possible lawsuits down the road; you can do absolutely nothing within the law. However, in plenty of other states, you may be legally required to say something about your haunted house, deaths, suicides or crimes.

To me it does sound a little unnecessary to disclose deaths in a property; after all, how does an aged grandfather dying comfortably in his bed impact the structural integrity of a home. Even more unfair is a home that has no past history, but rumors have taken over facts and turned it into a stigmatized property that now has to be disclosed to potential buyers. This has happened in cases of celebrity or well-publicized events like the home where JonBenet Ramsey lived. Owners of some so-called stigmatized properties have even resorted to changing the property address in an effort to remove some of the stigma. Unfortunately, since you can’t prove the unproven, sellers are stuck and must disclose in states that require it.

As a general rule, it’s always better to disclose everything you know about a home, whether or not the law requires it. It will give your buyer a sense of honesty that is always important in a business transaction and will allow you to move out with a clear conscience knowing you’ve done the right thing.

My up close and personal ghost experience happened in a 17th-century hotel in Rome. Although I never actually saw a spirit, they did move several things around and made a copy of The New York Times disappear and then reappear in the exact spot. It was enough to give me the creeps and start paying closer attention to cocktail party talk.

If you’re selling your home and you think that it may be stigmatized in any way, ethics should prevail; if it makes you uncomfortable probably a good thing to disclose it even though you’re not obligated. Have a boo time on Halloween!

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You found the perfect house; now what?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

You may think it’s finally over – you found your dream home, your forever home or your long-dreamed-of beach house. But guess what, unless you have lots of cash in your checking account, you will have to apply for a mortgage.

There have been for many, many years two basic types of mortgages, the fixed-rate mortgage and the adjustable-rate mortgage or ARM. The fixed-rate mortgage is just that – your principal and interest payment are fixed for the life of the mortgage or until you sell the property and satisfy the mortgage balance. Fixed-rate mortgages give you a set amount of money every month to budget for and builds equity for a home that you feel will be a long-term purchase. Building equity will also give you the option of refinancing in the future if rates go down possibly resulting in a lower monthly mortgage payment.

Adjustable-rate mortgages are typically a fixed rate for a specific number of years, for example, 5 years, and then are adjusted annually either up or down. Generally, adjustable-rate mortgages start at a lower rate than a fixed rate, but you take the risk of monthly payments increasing substantially as the rates fluctuate after the fixed number of years has been reached.

Adjustable-rate loans could be a good choice if you’re planning on selling your home within a short period of time prior to when the fixed-rate term expires. However, this type of mortgage does not build much, if any, equity, a consideration in a real estate market that may be on the way down.

Whichever type of mortgage you choose, the amount of money you put down will influence the rate you are offered. A 20% or higher down payment will likely provide the best mortgage rates and the most options as well as substantially reducing the risk of the home not appraising.

Putting down between 5% and 19% will put you in the position of having to pay a higher interest rate and/or fees. In addition, lenders most likely will require private mortgage insurance (PMI). Private mortgage insurance is an insurance policy that allows you to make a lower down payment by insuring the lender against loss if you don’t make your mortgage payments. A lower down payment could be a good thing for buyers with little cash or if the home requires work and the cash to do it. PMI payments start going down after equity has built up in the home.

Finally, there are no-down-payment or small-down-payment loan programs which are more expensive but are an alternative. If you or someone in your family are trying to get into a home with little cash, they should research FHA loans or, if qualified, VA loans, both with low down payment options.

Two things you should try and avoid in-home financing are balloon payments and prepayment penalties. Balloon payments are a large payment required usually at the end of the loan repayment period with varying amounts based on the terms of the loan. Prepayment penalties are an amount required if you refinance, pay off your loan early or sell your home. And one nice little trick to help you pay off your mortgage sooner and build equity is to make extra payments during the course of the year.

Once you find the perfect mortgage and get through the mortgage qualifying maze, you’re ready to enjoy your perfect home; I hope for you, it’s the beach house.

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Is homeownership threatened?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

For most Americans, their biggest source of wealth is the equity in their homes. But what if you never own a home? What if being a renter is your fate? How does that impact your future wealth and state of mind?

Homeownership rates for younger Americans have fallen over the past 10 years and are near the lowest levels in more than three decades of recordkeeping. About 40% of young adults ages 25 to 34 were homeowners in 2018 according to federal data analyzed by Freddie Mac. That is down from about 48% in 2001.

In addition, the median age of a home buyer is 46, vastly increased from when I purchased my first home at age 27. According to the National Association of Realtors, this is the oldest median age since they began keeping records in 1981. For young people, it’s a vicious cycle of rents going up and student debt putting more financial pressure on young adults who can’t seem to get a foothold in the American dream.

Generally, lower homeownership promotes lower growth by forcing older Americans to stay in their homes because there are fewer buyers for entry-level properties. And even though the price of entry-level homes has been rising, without savings, the pool of buyers keeps shrinking.

So, is homeownership worth it? Sometimes yes and sometimes no depending on individual needs. These are some of the questions you need to think about:

What can I afford, should I keep paying rent until I find the perfect home, or should I take the plunge now with the goal of trading up down the road?

How long do you plan on staying in the home? If you know your job may relocate you within a year maybe you want to wait before spending the money required to get into a home. Or if you’re living in a “hot” market you may want to go for it with the hope of turning a nice profit in a short period of time.

Even if your job is not a factor, are you the type of person who likes stability or flexibility? Owning a home by definition is not a flexible choice considering maintenance and repairs that are required in most homes, not to mention the cost of upkeep. If you want to be footloose and fancy-free, better keep renting.

Finally, your decision may be all about the family. If you have children, the quality of the schools may be your deciding factor. Do rentals even exist in the school district of your choice or is purchasing a home the only way to provide the best education for your children? Also, having property space for kids to run around may require you to purchase a home.

The advantages of owning your home are many, with building equity and establishing good credit being the primary reasons people buy homes. Even with the new tax laws limiting some deductions, many homeowners may still see tax benefits to owning. And of course, there is the independence of Americans to own their own property and not having to answer to landlords.

The disadvantages of owning start with finances. It costs more money to own and maintain a home than renting. When you rent, someone else is responsible for the repairs and the cost of those repairs. Renting also insulates you from falling home values, which we all remember has happened.

It’s nice to have a choice in life and a choice in whether you want to own or rent. Unfortunately, it appears we are building an ever-increasing group of permanent renters who may not have another choice. Let’s hope the American dream isn’t shattered forever.

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Real estate market disruption

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Is there an algorithm in your future? If you’re planning on buying or selling a house, get ready for the future of real estate.

In a world where technology has remade everything from your morning coffee to tracking your investments, the real estate market has remained very old school. Reams of paperwork are the norm and interaction with local real estate professionals is the custom in most markets around the country. It wasn’t that many years ago when local real estate associations opened up multiple listing access to consumers making practically everyone an informed expert. If the availability of multiple listing properties to everyone was a big step, wait until you see what’s coming down the road.

iBuyer computer platforms have been gradually immersing themselves in the real estate market, offering buyers and sellers practically on-the-spot gratification. An iBuyer is a company that uses technology to make an offer on your home instantly. iBuyers represent a dramatic shift in the way people are buying and selling homes, offering a simpler, more convenient alternative to traditional home sales. Just search iBuyers and you’ll be amazed at the hits you get.

Companies like Knock and Zillow are betting big time on the success of these platforms in a world where everyone is too busy to complete traditional real estate transactions. Knock, for example, helps customers buy a new home, usually an upgraded one, and then stages the old home and gets it on the market right away. There are, of course, fees for this service but for many professional couples, it’s worth it.

Zillow and others buy the property after an appraisal and the sellers move on without the hassle of selling. So far Zillow is moving along with its business plan, buying more than 1,500 homes in the second quarter of the year.

Then we have startups who are offering people with good income but not so good credit a way to get into a home. Divvy Homes buys homes then rents the homes to their clients so they can have a place to live, pay rent and build equity towards eventual ownership. This is an idea that has its roots in the real estate industry known as rent with an option to buy, which was a private contract between two parties. It worked for many buyers and sellers in the pre-tech world, especially for difficult-to-sell properties.

Now Divvy and others like Flyhomes are offering high tech plans to fill a need aimed at first-time buyers who are probably already renters. It’s not uncommon for first-time buyers to be faced with student loan debt and little or no savings while they’re getting their careers up and running.

Divvy’s plan is to charge monthly rent with about 20% of the monthly payment going toward equity to buy the property. The monthly rent is higher than what the going rate for a similar rental would be, but equity is being built. Naturally, Divvy makes most of their money from the rent paid.

Flyhomes offers a full-service brokerage, buys the homes for cash giving their clients an edge and then underwrites the potential mortgage. Naturally, there are fees attached to this as well as traditional real estate brokerage commissions.

Ask five different real estate agents what your home is worth and you’ll get five completely different answers. Ask an algorithm what your home is worth and you’ll at least get one answer which may or may not be correct. No matter how you feel about technology getting involved in real estate, we can all agree that it’s definitely a disruption.

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Fee-fi-fo-fum, do I smell a recovery?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Recovery, what recovery? That’s a word we left in our rearview mirror a long time ago. It’s true in Florida generally, and Anna Maria Island specifically has recovered nicely since the financial downturn. There are areas of the country that are still struggling, but August may have been the turn-around month.

According to the National Association of Realtors, August was the strongest month for sales of United States homes in nearly a year and a half. Sales of previously owned homes rose 1.3% in August with a median sale price of $278,200, up 4.7% from the previous August. Conversely, the availability of homes for sale fell in August further increasing prices. Add to this the average fixed-rate mortgage for a 30-year loan was 3.73% at the end of September.

Is this the beginning of the national real estate market starting to turn the corner? Real estate sales have been underperforming relative to jobs and the economy as a whole and economists are viewing the statistics for the past two months as a very good sign.

If you’re interested in how the national market compares to our local Manatee County market, keep reading.

Closed single-family homes were up 10.3% from last August and the median sale price continues to be strong at $317,000, 7.1% higher than last year. The average sale price for single-family homes was $408,738, up 4% from last year. The median time to contract is down by 4.5% to only 42 days and the month’s supply of available properties is 3.3 months.

Condos closed fewer properties down at 25.9%, however, the median sale price was higher at $205,000, up 7.9%. The average sale price was also up 13.1% to $251,339. The median time to contract was up 6.4% to 50 days and the month’s supply of condos is at 3.6 months.

Sales statistics are from the Realtor Association of Sarasota Manatee.

Our sales in both the numbers of properties sold and sale prices continue to perform well compared to the national statistics. Nationally, the median single-family sale price for August was $278,200 up 4.7% from last August, compared to Manatee County’s median of $317,000 up 7.1%.

Based on the above, it’s not a surprise that the southern region of the country ended August with an increase of 3.6% in sales, making it the largest annual growth in sales volume in the country. And this may be just the beginning, as more and more high-income residents of high taxed states are just beginning to feel the effects of the Tax Cuts and Jobs Act of 2017 and are taking refuge in the South.

There are 41 states that collect taxes on wages and salary, with California taking the highest percentage at 13.3%. The remaining nine states that are income tax-free are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. If you’re a part-time resident of one of these states and are considering full-time residency, check out the individual state’s qualifications to establish permanent residency. Both the state you’re leaving and the one you’re coming to have strict and varied residency rules.

It looks like there will be big changes for Florida and other low tax states right around the corner. Nevertheless, don’t get too comfortable with what you see in the rearview mirror when it comes to real estate markets. You never know when that truck will start gaining on you.

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Order out of chaos

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Writing has been compared to bringing order out of chaos, something I try to do weekly on this page, and one of the most chaotic aspects of real estate is the mortgage process, which may be getting even more confusing to the average home buyer.

As confusing as the typical mortgage process is, the relationship of Fannie Mae, Freddie Mac, FHA and Ginnie Mae – entities that are also known as government-sponsored enterprises (GSEs) – to the mortgage market continually contribute to the chaos.

Before we go on, a quick review: Over 50 years ago Congress chartered the government-sponsored enterprises to provide liquidity to housing finance. The GSEs securitized and guaranteed mortgages, freeing up private lenders to provide more loans, making mortgages more readily available to the average home buyer. This created the 30-year, fixed-rate mortgage, which has been the gold standard of housing finance for all these years.

It was a great system until it went off the rails with sub-prime mortgage products partly encouraged by Congress leading to the bursting of the housing bubble and financial collapse in 2008. The American taxpayer was on the hook for $190 billion dollars to keep Fannie and Freddie floating and they have been in government conservatorship since then.

Now the federal government wants to gradually shrink the GSEs and start returning them to private hands. One of the suggested ways is to require them to have additional capital and underwriting standards comparable to private lenders. Will this happen? Maybe, but even if the wheels start to spin in that direction, it will be a long painful process which could turn on a dime subject to the outcome of a national election.

In the meantime, there is a new type of unconventional mortgage that has turned up. It’s called asset-depletion loans or asset-dissipation loans. Basically, they are designed for people who don’t have conventional paychecks, particularly retirees. As long as the borrower’s ability to draw on their assets is not overestimated, the loans can be fine.

Fannie Mae and Freddie Mac do make these loans but only based on a borrower’s 401k assets. However, Fannie and Freddie have eased up on standards for this type of loan, asking for smaller down payments and allowing more debt for borrowers. Again, this creates more risk for the American taxpayers.

So, what else do the gatekeepers of the American housing market have up their sleeve? Well, there is something that many Florida residents will be very interested in. Within the past year, they rolled out a program that would treat manufactured homes the same as it does site-built properties.

This means that a previous market that was difficult to obtain mortgaging for will now operate as a conventional mortgage market. They have also designed mortgages for manufactured homes at lower interest rates than buyers of these properties were previously able to obtain, as well as allowing appraisers to compare manufactured homes to those built on-site when determining value.

This may be a great program for many buyers of manufacturers homes, but in Florida, as we all know, manufactured homes are the most vulnerable in storms. Again, call me crazy, but do we as taxpayers need to assume more mortgage risk?

Fannie Mae and Freddie Mac, as well as all other GSE programs, will go on for a long time before any real change is made. It’s almost impossible to take away something that’s been in effect for so long. All I can do is try to bring order out of the mortgage processing chaos.

More Castles in the Sand:

Luxury ain’t what it used to be

The fun and not-so-fun of selling a home

The fun and not-so-fun of buying a home

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Luxury ain’t what it used to be

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Did you ever feel sorry for the really wealthy real estate owners? Well, we’re at a point in time when there might be just cause for feeling sorry for them because like all sellers, when your market is slow everyone deserves some sympathy.

Wealthy buyers are pulling back from some of the most expensive housing markets in the country. Toll Brothers Inc., the nation’s largest publicly traded luxury-home builder said that purchase agreements fell 3% from a year earlier, worse than the expected 1% predicted.

A large slice of this decline is concentrated in California where homes under contract had an average price of $1.74 million in the last quarter. Toll Brothers further indicated their orders in California tumbled 36% from a year earlier.

Some of this decline in the luxury market, in California at least, is the Chinese buyers that are pulling back from the market combined with the federal tax overall limiting deductions for property taxes and mortgage interest. However, what happens in California may stay in California since Palm Beach, Florida recently had a record sale of over $100 million.

In addition, low interest rates, wage growth and record low unemployment rates are moving first time buyers into the market, creating a demographic shift in the lower price ranges. The luxury market is adversely affected by an improving lower end market since all real estate markets are interconnected.

That said, let’s take a look at the three-month analysis of properties selling over $1 million on Anna Maria Island and in Cortez for May, June and July. Closed sales are compiled from the Manatee County Property Appraisers Office and available properties from realtor.com as of this writing.

Cortez did not close any $1 million or over properties during May, June and July. In the prior analysis, there were two sales.

The city of Anna Maria closed 13 properties at $1 million or over, ranging from $3,395,000 to $1,075,000. The last three-month analysis showed 14 properties closed in this price range.

Finally, the combined cities of Holmes Beach and Bradenton Beach closed 14 properties $1 million or over during May, June and July, ranging from $3,725,000 to $1,000,000. The last analysis showed 19 closings.

Currently on the market or pending in Cortez, there are six $1 million or over properties. For the last analysis, there were five.

The city of Anna Maria has 48 properties either available or in contract ranging from $5,500,000 to just above $1 million. Besides the highest listing, there are two over $4 million, five over $3 million, 12 over $2 million and the balance below $2 million. The last analysis had 60 properties listed.

Bradenton Beach and Holmes Beach currently have 69 properties either available or in contract ranging from $599,000 to $1,149,000. Three are over $5 million, three are over $4 million, two are over $3 million, 15 are over $2 million and the balance are under $2 million. The last analysis had 68 comparable properties.

If the luxury market is falling off generally around the country price-wise, Anna Maria Island is not listening, at least not yet.

These continue to be pretty impressive numbers for a small island and an even smaller fishing village. And as noted in this paper previously, Cortez is the second least affordable place to live in Florida, according to a study by UnitedSatesZipCodes.org. First place goes to Boca Grande. To be fair, the rankings are determined by calculating several factors and Cortez being a small area with many high-priced homes certainly contributes to this calculation.

See you again in three months. In the meantime, it’s okay to feel sorry for the very wealthy – the little darlings.

More Castles in the Sand:

The fun and not-so-fun of selling a home

The fun and not-so-fun of buying a home

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The fun and not-so-fun of selling a home

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Last week we talked about the fun and not-so-much fun of buying a home. This week we’ll talk a little about selling your home, choosing the perfect realtor and not necessarily one you’re related to. But before we do that, let’s review the June and July Manatee County sales statistics as reported by the Realtor Association of Sarasota and Manatee.

In June, Manatee County closed 2.2% fewer homes than last year, not surprising for this time of year. In spite of that the median sale price, half above and half below, increased by 5% from last year to $315,000. The average sale price was $397,987, up 8.8%, and the month’s supply of properties is down to 3.6 months.

June’s condo sales increased for the number of sales by 6.1%, the median sale price was $210,000, up 14.3%, and the average sale price was $246,381, up 5.2%, all impressive numbers. The month’s supply of properties was 4.2%.

July single-family sales were down slightly by 1.8%, but the median sale price broke a record at $325,000 up 5% from last year. This is the highest median price since the housing crisis more than a decade ago and near historic levels. The average single-family home price was $391,049, up 2%, and the month’s supply of properties was down to 3.4%.

Condo sales were up by 8.7% with a median sale price of $191,000, down 4.1%. The average sale price for condos was $216,523, down 6.6% from last year and the month’s supply of properties was 3.7%.

Do these numbers give you incentive to find that perfect realtor and consider selling? Maybe, but remember statistics are only a snapshot in time and, although our sales and appreciation rates continue to go up every month, it could change in a heartbeat.

But just in case you’re ready to cash in, here are a few tips for choosing a realtor:

Although there are many questions you should ask a real estate professional before you turn over what may be your biggest asset to them, the two that are most important to me are how long have you been in residential real estate sales and what is your specific marketing plan?

Much of real estate experience is an on-the-job learning experience but choosing an agent who has accumulated a few designations or certifications shows a commitment to his/her profession. Certainly, you should ask if real estate sales are their full-time job. There are sales agents who get into the field thinking it’s a part-time job they can fit around their children’s school schedule. Trust me you don’t want this person.

As far as a marketing plan, the agent should be prepared to show you a written plan involving print advertising, open houses and digital participation. They may also include a pricing schedule suggesting a step-down pricing recommendation for 30, 60 or 90 days in the event offers are not coming in. As part of this plan, your agent should advise how frequently he/she will be in touch with you regarding showings and feedback.

It is also important for you to know how long homes in your area are taking to sell and the variation between the listing and final sales prices. I frequently note these statistics in my monthly updates for Manatee County because they are so important to the overall picture of the market.

Finally, giving your listing to a relative may look appealing since you already have a relationship and he/she may offer to reduce commission for you. However, it takes away the business aspect of the transaction and gets into the emotional aspect. My advice is don’t do it.

I’m looking forward to receiving the August Manatee County real estate numbers and hope you have a fun selling experience with a qualified broker.

More Castles in the Sand:

The fun and not-so-fun of buying a home

The challenges of inheriting a house

Uncovering a home’s defects

Castles in the Sand

The challenges of inheriting a house

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

No one wants to see a loved one pass away, but it’s inevitable that we all will have that experience and along with the grief comes the distribution of personal items and property. As emotional as sifting through your family’s papers and clothing is, the real challenge at this time of your life will be selling their property.

The important thing to be clarified before death is if there is a will or trust in place. Dying without a will causes the estate to default to the statutes of the state to determine who the legal heirs are. Needless to say, that will be a time-consuming and possibly costly process involving probate. Even a will needs to go through a probate process, however, living trusts will avoid probate. These are all legal issues which will need a legal opinion.

If there is a home to be sold and there is a legal will or trust, that responsibility will fall to the executor of the estate. The executor has the power to make all decisions but should certainly confer with all other beneficiaries to the sale of the house.

As in all property sales, decisions need to be made starting with a reasonable selling price. More than one estimate of value should be obtained from real estate professionals and a licensed appraiser should also be considered, especially if there are multiple heirs, to avoid any appearance of impropriety.

Whoever is handling the sale of the property should be prepared to spend some money before the home is sold. Property taxes, utility bills, lawn maintenance and unforeseen repairs all have to be considered prior to sale.

In addition, the property needs to be cleaned out of personal items and, based on the recommendation of a real estate professional, the furniture removed. There are companies that take care of this and any furniture not sold at an estate sale is removed by the estate person for a fee. However, the family will still need to decide which items will go into the sale, which will be passed along to other family members and which will get destroyed – not an easy process.

Then, of course, as in any property sale, decide whether renovations and/or cosmetic fixes should be made. Most professionals will tell you that this is not the time for major renovations. If necessary, cosmetic fixes would be a better choice. Cleaning, painting, yard and garage clean up is probably the most practical and least expensive way to go. Here again, the advice of a competent and experienced real estate professional is essential to understanding the local market.

Heirs who are in a tight financial position and need to sell quickly could consider one of the quick-sale companies as long as they are willing to take a discounted price. The heir’s tax consequences should also be considered before any money is spent and sale offers are considered, especially if the property has been in the deceased’s name for a long time.

Here in Florida it’s very common for parents to pass away and leave property in their estate to be sold by their heirs. This is a little more of a problem if the beneficiaries are out of state, but again because it’s common in Florida, there are several companies to assist heirs in the disposal of personal property and furniture.

Selling a family home is always emotional and more so on the heels of a loved one’s death. Ask for help during this time; it’s out there.

More Castles in the Sand:

Uncovering a home’s defects

How to determine the truth about home flooding

It’s all about the kitchen

Castles in the Sand

How to determine the truth about home flooding

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Home inspections and seller property disclosures are an intricate part of home buying. You would think a seller’s disclosure is pretty clear cut, but it’s far from that, especially when it comes to flooding.

Flooding is the one thing potential property owners on bodies of water want to know the most about but, in fact, know the least. In Florida, there is a seller’s property disclosure form provided by the Florida Realtors Association. Although this form is provided to sellers when they list their property for sale with a real estate professional in Florida, they have no legal obligation to fill it out and sign it. Sellers and their realtors do, however, have a legal obligation to disclose to the buyer all facts that can materially affect the value of the property. It just doesn’t have to be in writing.

When it comes to the disclosure on previous or present flooding, sellers are only required to disclose what they know. If the house was flooded five years before they purchased and they were not aware of it, there’s nothing to pass on to a new buyer. Essentially sellers are required to disclose material defects to buyers that they know about.

Since most home inspectors cannot determine if a home has been flooded in the past, where do buyers go for a history of the property’s flooding? It’s a good question and one that U.S. lawmakers are just starting to look at. The House Financial Services Committee advanced legislation in June that would require the Federal Emergency Management Agency (FEMA) to share information about a property’s flood history. This would be a least a step in the right direction for buyers, but when and how this information is provided could be a long way off.

FEMA has recently released data on all 2.4 million flood damage claims processed since the 1970s. Unfortunately, it’s not a practical reference for individuals because of size and lack of address referencing. FEMA does update federal flood zone maps but again that is geared more for insurance companies and gives no information specific to individual properties.

There are some organizations that are trying to improve flood disclosure information. One of them is First Street which collaborates with Columbia University and the Massachusetts Institute of Technology among others. It is building a comprehensive database of homes that have flooded or are at risk of future flooding. It uses satellite imagery, high watermark data and other information, including FEMA data on flood claims, to determine if homes may have been flooded.

This information is not new; it has been available to large real estate owners but was financially out of reach for individuals. First Street claims it will launch its database within a year and it will be free for individuals to access. Sounds great, but there is a big margin of error within some of this information. It goes without saying that the impact on property values could be enormous. Will buyers’ willingness to purchase a property be influenced based on this new, possibly subjective information?

Next week we’ll talk about all the other disclosure requirements in Florida and there are plenty. Purchasing property on or near bodies of water, oceans, rivers and lakes are all susceptible to flooding and are inherently risky. There are no guarantees in life and certainly none in homeownership. Do your due diligence with the information available and hope for the best. Look on the bright side, at least we don’t live with the threat of earthquakes.

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It’s all about the kitchen

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

You may not want to do a kitchen renovation in August, but August is the perfect time to start planning one. Sitting on the patio with your iPad or on the beach with a home decorating magazine is an easy way to start planning that new kitchen. Add a cool coconut drink and you’ll soon forget that it’s 95 degrees.

Kitchen trends change almost as fast as fashion trends. What’s in now will undoubtedly be out in three years. It’s impossible to keep up and most of us don’t even try, but if you’re one of those who must have the latest, here’s where you should be looking:

In spite of the fact that we’re told white kitchen cabinets are out, according to Houzz, it’s still the most popular color at 43% of remodels. Second place is wood cabinets at 25%, followed by gray at 11%.

The trendy colors are now bold – deep blue, red and, ready for this, black. Now over 30 years ago when my sister-in-law was choosing kitchen cabinets for their new home, she picked black. She was always a trendy gal, but at the time I had never seen black kitchen cabinets before and was definitely taken aback. Little did I know she was decades ahead of her time. Today’s black is designed to provide a quiet soulful balance in the kitchen, combining cabinets, matte black appliances and black backsplashes.

Completely the opposite of black, a color that is also new and trending is mint green. Certainly, in my opinion, mint green is a better choice for beach living if you must give up white. Finally, two-tone cabinets, different color uppers and lowers are so in. I expect they’ll be out soon. Nevertheless it is a nice look. If you can’t bear to give up your white cabinets, you can make them trendy with dark lower cabinets.

As far as countertops, stone is and probably always will be the choice of most homeowners. Granite lost its first-place position a long time ago, replaced by quartz, but the trend now is to use concrete counters and natural stone. Backsplashes are also being invaded by natural stone with edges. I wonder how you keep that clean, with it installed right up to the ceiling?

The most popular cabinet style, according to Houzz, is holding with the ubiquitous shaker cabinets chosen by 57% of homeowners. Open shelving instead of all upper cabinets are also trending. They create a more uncluttered feeling, especially with an interesting backsplash. But if you do have upper cabinets, they must go to the ceiling.

And high tech is all over new kitchens – appliances that talk to you and your iPhone and charging stations are a must just as are hoodless ventilation systems. Thankfully rose color hardware and appliances are gone after their 15 minutes of fame.

So is doing an expensive kitchen renovation worth it in dollars? Maybe or maybe not, depending on what you do. Eighty percent of buyers place a nice kitchen in their list of the top three most important spaces in a home. Nationally, the average cost of a kitchen renovation is $35,000 but you could spend three times that.

Most kitchen renovations do add value to a home but most will also not be fully reimbursed in actual dollars. The benefit of a nice kitchen, however, will be in reduced selling time, which is generally reflected in actual dollar savings. Don’t forget, if you’re renovating before putting your home on the market, minor renovations can make a huge difference in appearance and get you the bigger bang for your buck.

It’s easy to dream about your dream kitchen during a hazy summer afternoon, just don’t let the heat and coconut drink give you delusions of grandeur, especially if you’re thinking black cabinets.

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The suburbs and the millennials